Blackberry 2004 Annual Report Download - page 20

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Research In Motion Limited • Incorporated Under the Laws of Ontario (In thousands of United States dollars, except per share data, and except as otherwise indicated)
Results of Operations
Fiscal year ended February 28, 2004 compared to the fiscal year ended March 1, 2003
Revenue
Revenue for fiscal 2004 was $594.6 million, an increase of $287.9 million or 93.9% from $306.7 million in
the preceding year.
A comparative breakdown of the significant revenue streams is set forth in the following table:
Change
Fiscal 2004 Fiscal 2003 2004/2003
Number of handhelds sold 920,000 277,000 643,000 232.1%
Average selling price $373 $443 $ (70) (15.8%)
Handhelds $ 343,154 57.7% $122,711 40.0% $ 220,443 179.6%
Service 171,215 28.8% 129,332 42.2% 41,883 32.4%
Software 47,427 8.0% 21,655 7.1% 25,772 119.0%
Other 32,820 5.5% 33,034 10.7% (214) (0.6%)
$ 594,616 100.0% $306,732 100.0% $ 287,884 93.9%
Handheld product revenues increased by $220.4
million or 179.6% to $343.2 million or 57.7% of
consolidated revenues in fiscal 2004 compared to
$122.7 million or 40.0% of consolidated revenues
in fiscal 2003. This increase in handheld revenues
over the prior year is primarily attributable to a
volume increase of 232.1% or 643,000 units to
approximately 920,000 from approximately
277,000 in the prior year. The Company has
launched a number of new products in the current
fiscal year which operate on the GPRS, iDEN and
CDMA20001X wireless networks that were not
available in the prior year, which account for the
volume growth. This volume increase was partially
offset by a 15.8% reduction in the ASP in fiscal
2004 to $373 per unit from $443 per unit in fiscal
2003. The Company’s ASP is influenced by the
impact of product mix in two primary ways: (i) the
percentage of new BlackBerry 6200 monochrome/
7200 color handheld series versus the 6500/6700
and 7500/7700 handheld series; and (ii) the mix
between monochrome and color BlackBerry
handhelds as color BlackBerry handhelds are more
expensive. The Company experienced a continuing
increase in the percentage of color products in its
overall handheld sales mix during fiscal 2004 and
expects this trend to continue in fiscal 2005. The
Company also expects its ASP for handhelds to
continue to decline in fiscal 2005 as a result of the
continuing shift to lower priced products and new
product introduction plans, some of which are
expected to have lower price points.
Service revenue increased $41.9 million or 32.4%
to $171.2 million and comprised 28.8% of
consolidated revenue in fiscal 2004, compared
to $129.3 million in fiscal 2003. BlackBerry
subscribers doubled to approximately 1,069,000
from approximately 534,000 as at March 1, 2003.
The Company has also experienced some net
migration of its direct (“full email”) BlackBerry
subscriber base to its carrier customers (“net
migration”), for whom RIM provides lower priced
“relay” services. The Company expects this net
migration to continue in fiscal 2005. The monthly
average revenue per unit (“ARPU”) for service is
expected to continue to decline in fiscal 2005 as
a result of the aforementioned migration and also
because the continuing net increase in the
BlackBerry subscriber base represents subscribers
for which RIM receives a monthly relay access fee
from its carrier customers, rather than subscribers
who purchase full e-mail service directly from RIM.